Floater projects recovery to be weaker this year

FPS orders have risen on the back of higher oil prices.

Whilst the average floating productions system (FPS) fell further, orders are on the right track to recovery, UOB Kay Hian said.

Citing the latest Energy Maritime Associates (EMA) report, the brokerage firm said the average FPS order since 2008 fell further from 1.5 units to 1.4 units per month. The recent stability in oil prices saw five new orders placed - one FPSO and four FSRUs - as compared to none placed in the same period last year.

Meanwhile, as of April 2017 there were 229 projects in the appraisal, planning or bidding/final design stages. These represented a 5% YoY decline (2Q16: 240) but a 1% QoQ improvement (1Q17: 226). Projects in the bidding/final design stage as a proportion of total projects currently stand at 24%, having bottomed out at 21% in 3Q16. The improvement, however, is due to low base effect. Projects as a total number of floater projects continue in a downward trend.

Here's more from UOB KayHian:

Project awards over 2017-19 remain robust, but deferrals are rising. The continued stability of oil prices continues to see awards for projects in the bidding/final design stage remaining relatively unchanged at 54 units (4Q16: 57). The project pipeline for 2017-19 remains robust, with only three orders in this stage falling back into the planning stage. That said, project award deferrals rose from 13 (21%) in 4Q16 to 16 (28%) in 2Q17.

Estimated US$43.4b of capex to be spent over 2017-19. Despite five contract awards in 1Q17, capex for award in 2017-19 is expected to be higher at US$43.4b, vs prior projection of US$37.5b in 4Q16. Capex spend has also been brought forward, with current projections showing a highest= capex spend for 2017 as compared to two quarters ago.